Reform could increase some California premiums by 30 percent

By BenefitsPro

By Kathryn Mayer

Middle-income adults living in the Golden State may see their health insurance premiums rise 30 percent next year because of the Patient Protection and Affordable Care Act, according to a government report.

Covered California, the state agency that will implement the law, said premium increases are most likely to hit those middle-income Californians who don’t receive health care coverage through their employers. On the other hand, lower-income consumers eligible for the law's tax subsidies could pay significantly less in monthly premiums compared to prior years.

The figures released last week came shortly after HHS Secretary Kathleen Sebelius conceded that health reform could cause some premiums to rise. Just how much reform will impact health care costs has been a major bone of contention between supporters and protesters of the law.

An analysis by the Milliman consulting firm found lower-income consumers could save up to 84 percent because of the law’s tax subsidies. Under the law, individuals who make less than $46,000 annually or families who earn less than $94,000 annually will qualify for subsidies.

According to the study, the factors increasing premiums overall include requirements for richer benefits for individual plans, the increasing number of older and less healthy people who will obtain coverage, the new health insurance tax and several other changes mandated by PPACA.

“All these expansions add to the already increasing cost of care — costs that have outpaced inflation as obesity, chronic conditions and many other factors have driven up medical expenditures,” said Patrick Johnston, president and CEO of the California Association of Health Plans.

“Lower cost sharing, richer benefits and more predictable coverage will come at a cost for some,” he said.

The report estimated that young people under 25 could also face premium increases that are 25 percent higher than average because of the law’s age rating provision.

Individual premiums in California would have increased 9 percent, on average, in 2014 in the absence of health reform, researchers found.

Johnston also noted that only a small percentage of Californians will buy their insurance through the exchange.